General Reinsurance Corporation v Forsakringsaktiebolaget Fennia Patria
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE OLIVER,LORD JUSTICE ACKNER,LORD JUSTICE LAWTON,LORD JUSTICE KERR,LORD JUSTICE SLADE |
| Judgment Date | 13 May 1983 |
| Neutral Citation | [1983] EWCA Civ J0513-1 |
| Judgment citation (vLex) | [1983] EWCA Civ J0330-8 |
| Docket Number | 83/0158,83/0189 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 May 1983 |
In The Matter of a Lease dated the 29th day of August 1961 and Made Between William John Amhurst (1) and Walton Hassell & Port Limited (2)
[1983] EWCA Civ J0330-8
Lord Justice Lawton,
Lord Justice Ackner
and
Lord Justice Oliver
83/0158
1980 A. No. 3928
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (Civil Division)
(On appeal from Mr. John Mowbray QC sitting as a Deputy High Court Judge of the Chancery Division)
Royal Courts of Justice
Mr. MICHAEL RICH QC and Mr. RICHARD MOSHI (instructed by Messrs. Bulcraig & Davis) appeared on behalf of the Appellants (Defendants).
Mr. JOHN HAMILTON (instructed by Messrs. Macdonald Stacey, Agents for Messrs. Thorne & Thorne, Minehead, Som.) appeared on behalf of the Respondent (Plaintiff).
This is an appeal from an order made by Mr. John Mowbray, Queen's Counsel, sitting as a deputy judge of the Chancery Division, on the 12th October 1981, declaring that on the true construction of the lease referred to below and in the events which have happened the plaintiff landlord is entitled to receive from the tenant as from the 24th June 1975 rent at such rate as may be determined by an independent surveyor nominated in accordance with the lease notwithstanding the failure of the plaintiff to serve a notice of assessment of rent on the defendants prior to the 25th December 1974.
This is yet another rent review clause case, but the history here is an unusual one. The defendants are the lessees by assignment of certain commercial premises, No. 449 High Road Wembley demised by a lease dated the 29th August 1961 and made between the plaintiff of the one part and Walton Hassel and Port Limited of the other part for a term of 28 years from the 24th June 1961. The original rent reserved was a sum of £2,500 for the first 14 years of the term and thereafter a rent of £2,500 or such higher sum as should be ascertained under the subsequent provisions of the lease. The proviso to the reddendum, which is the only part of the lease that matters for present purposes, is (so far as material) in the following terms: "Provided always and it is hereby agreed that the yearly rent payable by the Lessee during the second fourteen years of the term hereby granted (hereinafter called 'the second period') shall be the yearly sum of £2,500 aforesaid or such yearly sum representing the rental value of the demised premises in the open market on a Lease for fourteen years certain on the assumption that the premises are available for letting with vacant possession and without the payment of a premium whichever shall be the higher such assessment of the second period rent to be made in the following manner, that is to say: (a) such assessment shall be made in the first instance by the Lessor and submitted to the Lessee for approval in writing on or before the 25th day of December 1974….."
There follow certain provisions about what is to happen if the assessment is not agreed. If they fail to agree the assessment before the 25th December 1974 (time being of the essence for this agreement) then the matter is to be referred to an independent surveyor appointed by the parties, but if they fail to agree on his appointment by the 25th January 1975 (in respect of which, again, time is of the essence) then the independent surveyor is to be appointed by the President of the Royal Institution of Chartered Surveyors.
The clause is a slightly unusual one, since it prescribes expressly that time is to be of the essence for the two subsequent stages of the review machinery but does not so prescribe in relation to the initiating assessment under sub-paragraph (a).
In fact the landlord—or, to be more accurate, the solicitors then acting for him—allowed the 25th December 1974 to pass without serving the triggering assessment. They woke up to that omission fairly shortly afterwards and on the 25th January 1975 they wrote seeking an extension of time and asking for the matter to be referred to an independent surveyor. Perhaps not altogether surprisingly, in the light of the law as it then stood, the tenants declined to entertain either of these suggestions. Nothing daunted, the landlord nevertheless, on the 10th February 1975, approached the President of the Royal Institution of Chartered Surveyors to make an appointment but, after some correspondence, he, having learned that the appointment was opposed by the defendants' solicitors, declined to act in the matter. That was in March 1975 and thereafter nothing further was done and, indeed, nothing further could then have been done unless the landlord was sufficiently handy to start proceedings and litigate the matter to the House of Lords. There the matter rested until 1978. In March of that year the House of Lords gave their decision in the case of United Scientific Holdings Ltd. v. Burnley Borough Council, which was reported first in the Times newspaper and a few weeks later in the Weekly Law Reports. The landlord's then solicitors then wrote to the defendants' solicitors on the 2nd June 1978 calling on them to withdraw their objection to the appointment of an independent surveyor. That received the perhaps predictable answer that, whatever may have been the position in the United Scientific case, the clause in the instant case was one where time was of the essence and that accordingly, there having been no triggering notice within time, the subsequent machinery never came into operation. After some further correspondence up to the end of July 1978, the landlord, on the 12th October 1978, issued an originating summons seeking, in effect, declarations (a) that time was not of the essence with regard to the initiation of a rent review and (b) that the defendants were not entitled to object to the appointment of an independent surveyor.
Evidence was duly filed on that summons which came on for hearing in May 1979 before His Honour Judge Mervyn Davies (as he then was). He held that in the light of the United Scientific case and on the true construction of the lease, time was not of the essence of the review clause but that the occasion for the appointment of an independent surveyor had not yet arisen since the letter of the 25th January 1975 was merely a request for an extension of time and was not the landlord's assessment of rent required to trigger the operation of the review clause. Thus he granted the plaintiff the first declaration sought but refused the second. The point that the 25th January letter did not operate as the necessary trigger does not seem to have occurred to the plaintiff or his advisers until the hearing and on 9th May 1979 a belated attempt was made to rectify the omission by serving a notice which specified a market rent of £16,000 per annum. The learned judge declined to rule on the validity of that notice. He expressed a view that there had been unreasonable delay in serving it and that if that had resulted in prejudice to the tenant such prejudice might invalidate it, but since the defendants had not come to court to meet a case of an ex facie valid notice and therefore had not been given the opportunity to adduce any evidence of prejudice, he felt himself unable to deal with the matter. The defendants appealed to the Court of Appeal against the judge's declaration that time was not of the essence and on the 18th January 1980 that appeal was dismissed. Thereafter the President of the Royal Institution of Surveyors was persuaded to make an appointment but the surveyor so appointed was, perhaps not unnaturally, reluctant to enter upon a determination whilst there was still a dispute about whether the notice which triggered the clause was a valid notice.
Accordingly, on the 1st October 1980, the plaintiff issued a further originating summons claiming a declaration that the plaintiff is entitled to receive from the defendants such rent as is determined by the surveyor appointed despite the failure to serve a notice of assessment prior to the 9th May 1979. That summons came before Mr. Mowbray, Queen's Counsel, in October 1981 and the sole question which fell to be argued before him was whether the delay which had occurred since the 25th December 1974 in serving the triggering notice was such as to invalidate the notice of assessment. The defendants did not rely upon any point of estoppel nor did they seek to adduce any evidence to shew that they had suffered any prejudice as a result of the delay. The sole questions before the learned deputy judge were (a) whether the delay amounted to an abandonment of the landlord's right to serve a notice and (b), assuming no abandonment, whether the delay (i) was unreasonable and (ii) of itself invalidated the notice.
The learned deputy judge found that the delay which had occurred was unreasonable. He gave no independent reasons for this finding but adopted the reasoning of Judge Mervyn Davies on the previous summons which was, in effect, that the landlord ought to have served his assessment notice before the issue of the first originating summons (on the 12th October 1978) and that failure to serve between then and the 9th May 1979 constituted unreasonable delay. He held, however, that such delay, although unreasonable, did not invalidate the assessment notice as a matter of law because mere delay, without proof of prejudice to the tenant, does not prevent a landlord from relying out of time on a rent review clause where time is not of the essence. He went on to hold, on the facts, that the delay which had occurred was not evidence of abandonment. He accordingly granted the plaintiff the declaration sought.
It is against that declaration that the...
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